IBC Said to Seek $300 Million to Expand Israel’s Internet

  • Israel Broadband Company plans to boost fiber optic network
  • Country’s internet infrastructure dominated by two companies

The company laying out Israel’s new high-speed internet infrastructure is looking for one or more partners to invest about $300 million in the project, according to three people with knowledge of the matter.

Rothschild is helping Israel Broadband Company Ltd., a joint venture of Israel Electric Corp. and a consortium led by Sweden’s ViaEuropa, to find investors with an emphasis on local groups, the people said, asking not to be identified because the talks are private. BDO Ziv Haft is drafting the strategic plan for IBC.

Partner Communications Company Ltd., controlled by billionaire Haim Saban and Israel’s second-largest mobile provider in terms of subscribers, has conducted preliminary work into the feasibility of a potential partnership, one of the people said. A Partner spokeswoman said no decisions have been made.

In addition to the funds required to expand its fiber-optic network, IBC needs help to win new customers fast. Israeli regulation bars IBC from operating as an internet service provider. A spokesman said the company will open a data room for the deal within a month and isn’t in talks with any investors.

IBC’s pledge to shake up the internet market in 2014 initially worried investors in Bezeq Israeli Telecommunication Corporation Ltd. and Hot Telecommunication System. That promise hasn’t yet materialized. IBC’s customer base is “negligible,” the Ministry of Communications said in an e-mail. The company has less than 2,500 customers, Globes reported in February.

A partnership with one of Israel’s major telecommunication companies “would give IBC a better chance of surviving and creating an actual third infrastructure, which would mean a significant increase in competition in the fixed-line market,” said Gil Dattner, an analyst at Bank Leumi Le-Israel Ltd. “But there are a lot of ifs at the moment.”

Shares in Cellcom Israel Ltd., the country’s largest mobile provider, dipped 2.5 percent to 31.45 shekels at 2:57 p.m. in Tel Aviv. Bezeq shed 2 percent to 7.399 shekels. Partner fell 2.2 percent.

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